Pros and Cons of Investing in Gold and Silver

With government spending out of control and debt levels at record highs, many investors are wondering what to do with their money. Fears of hyperinflation and economic collapse that seemed crazy just a few years ago now seem all too plausible, and the roller coaster-like movements of the stock market have done nothing to alleviate the uncertainty.

If you are concerned about the health of your own portfolio, you may be taking a look at the precious metals market, but is buying gold and silver really the right thing to do? Here are some of the pros and cons to consider if you are thinking about adding gold, silver and other precious metals to your stable of investments.

Potential benefits of buying gold and silver:

  • Gold will never go to zero. When you buy shares of an individual stock, there is always a chance the company’s value could go to zero. The catastrophic failure of a key product, a devastating lawsuit or a confluence of unforeseen events could all send the stock price plummeting, but gold has intrinsic value, and it will always be worth something.
  • Gold has been a store of wealth from time immemorial. Gold has been prized for its beauty throughout human history, and that is unlikely to change any time soon. In the past, gold was often the only valid form of currency, and it is still a stable store of wealth in modern times.
  • Having a physical asset can give you peace of mind in trying times. Having an asset you can touch, see and hold can give you peace of mind in these difficult times. When you look at your stash of gold and silver, you can have faith in the wealth you have accumulated.
  • The value of collectible gold coins may rise over time. The daily spot price of gold forms a basis for its value, but gold coins also have collectible value. If you choose the right gold and silver coins, you could see their value rise sharply over time.
  • The potential risks of investing in precious metals:
  • Carrying costs can be high. Paper assets like stocks and mutual funds can be bought and sold for next to nothing, and carrying costs are nil. But when you invest in gold and silver, the carrying costs can be substantial, and those expenses could reduce your profit margin when it comes time to sell.
  • You will need to insure your purchases. Unlike bank certificates of deposit and savings accounts, gold and silver do not come with insurance. If you want to protect your stash of precious metals against theft, loss or damage, you will need to purchase that insurance on your own.
  • Storage can be a problem. If you plan to keep your gold and silver coins at home, you will need a secure place to put them. That could mean buying a large, sturdy, and expensive, safe, and you will need to factor the cost into your investment decision.
  • Collectible gold coins can lose value, especially if you choose the wrong issues. Gold and silver coins can gain value over time, but they can also go down in value. If you choose the wrong issues, you could see the resale price of your investment plummet.

Investing in gold, silver and other assets can be a smart move, especially during these difficult times. Gold has been a reliable store of value for thousands of years, as well as a reliable way to buy and sell goods and services. Even so, there are risks involved when investing in precious metals, and it is important to know all the facts before you spend your hard-earned money on a pile of shiny coins.

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